Idea Generation – A gap in the Procurement technology market?

What an amazing time to be in Procurement… Global supply chains are facing up to COVID induced pressure. Customers’ expectations for full supply chain visibility are no longer a nice to have but an essential aspect of day-to-day work. Add to…

April 8, 2021


What an amazing time to be in Procurement…

Global supply chains are facing up to COVID induced pressure. Customers’ expectations for full supply chain visibility are no longer a nice to have but an essential aspect of day-to-day work. Add to this the exponential potential that is released when you add smart automation to the mix, and it makes Procurement the place to be. Oh, and despite all our technological advances, one grounded ship can still put 10% of global supply chains on hold!

There is good news too. Digital technologies have stepped beyond the functional/transactional and are now reaching the unloved and undervalued parts of the supply chain process, such as procurement performance management. Smart automation has added another dimension. AI-enabled spend analysis technology is available within S2P technologies such as Coupa and Ariba, and best of breed solutions, such as Rosslyn Analytics. This helps to improve the efficiency of the buyer by reducing time spent doing classification. There are also great opportunities in terms of scraping data, to identify patterns of purchasing within the organization.

An Agile Solution Leads to Procurement Success

At Per Angusta, we focus on providing a dynamic dashboard for the procurement engine. Our Procurement Performance Management platform enables buying teams to achieve quantum gains in accountability, collaboration and agility, turning buyers into bottom-line heroes. While S2P solutions provide the engine of sourcing and procurement activity, often they miss the potential to help the user (buyer/CPO) take a step back, survey performance, and decide where and how to accelerate next. After all, Procurement is a service function, with customers to satisfy. Having the dashboard helps you go further and faster and make your customers happier.

Add to this an esourcing tool, such as MarketDojo, and Per Angusta’s pipeline management and savings reporting tool and you have technology at a cost that is affordable to many, smaller organizations and not just multinational blue-chip companies.

Idea Generation Contributes to Savings

This all sounds wonderful, and with some thought and hard work, it is achievable for both big and small organizations. However, I believe that some gaps remain in the spectrum of procurement solutions, of which there are many. The area in question is idea generation. After all, running an RFQ or eAuction is only one way of reducing costs. There are many others: consolidating demand, changing specification, reducing total cost of ownership, and cost breakdown analysis, to name but a few.

Over the last few years, a colleague and I had the opportunity to lead the Procurement Academy for a major automotive manufacturer. We covered the entire category management process from start to finish, as well as training Procurement professionals in how to manage projects effectively, including both hard and soft skills. One topic was idea generation, presenting six ways for groups to generate new ideas, spanning from brainstorming to de Bono’s six thinking hats! I found that few of the trainees had ever used more than two, one being brainstorming.  Giving them additional tools and techniques to do this enhanced their confidence to deal with challenging colleagues and suppliers. For me, this is the next big opportunity for procurement technology to join even more of the dots.

Think about it for a moment, how do we typically generate ideas for savings?

  • We bring together buyers with experience of the category and procurement
  • In the best situations we involve others involved in that supply chain, whether they are suppliers or customers/users such as Engineering, HR, IT and Marketing. 
  • We compare what we are doing to what our competitors’ practices, or even companies in other sectors. 
  • We bounce ideas off each other
  • Generate long lists, usually in Excel
  • Narrow them down based on certain criteria and
  • Focus on the best next steps.

Idea Generation Reveals Opportunities

Typically, the process is arduous, with frequent delays in the process where participants need to go away to research the supply market, check in with stakeholders or review and revise their baseline assumptions. It is also limited to the knowledge of the participants and their sources. Much of this could be replicated and accelerated by smart automation. We can scrape data from a myriad of sources to provide the inputs. Algorithms can be developed to develop new combinations and possibilities. Machine learning could be used to review these ideas against comparators and improve them, and finally algorithms can be used to select the best ideas to take forward. In this way, procurement professionals could consider far more possibilities and develop better ideas in less time. They would also have more time to focus in strategy than on updating Excel spreadsheets. Don’t get me wrong, Excel is good, but it is not the answer to all Procurement problems.

There is loads of great procurement technology now available. There seems to be an exponential growth in the number of solutions available to address supplier relationship management, supply chain risk, sustainability, environmental analysis, and other areas that support the core processes of source to pay and contract management. Great progress has been made in terms of technology to support these core areas; the focus should now turn to generating future supply chain possibilities. We need to change the focus from simply looking in the rear view mirror to manage procurement, to assessing the landscape as fully as possible, so that we can use all the data available to us (and others) to set the direction for the future.

Wrote by Richard Nixon, Head of the United Kingdom and Nordics at Per Angusta.


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